Virtual machines are “virtualized” versions of computer systems. Supervisory software such as a hypervisor abstracts computer hardware from software executing in a virtual machine. Virtual machines provide benefits such as security, scalability, robustness and other benefits. Virtual machine templates may be used to quickly spawn virtual machines without needing to install software and configure various options of the virtual machine. However, virtual machines templates are typically quite large and thus consume a large amount of disk space for storage of the templates as well as bandwidth resources when transferred over a network.